NASDAQ:INAB
READ THE FULL INAB RESEARCH REPORT
IN8bio, Inc (NASDAQ:INAB) announced a restructuring in a September 4th press release indicating that the company will focus on the INB-100 program for acute myeloid leukemia (AML). Due to the difficult financing environment and investor lack of interest in pursuing a glioblastoma multiforme (GBM) program, IN8bio has decided to severely cut costs and focus its remaining resources on the very successful AML program which has observed 100% progression free survival. This narrowing of focus has allowed the company to execute a $12.4 million private placement led by a partner healthcare-focused institutional firm and other investors.
As a result of this decision to streamline the company, the company is cutting its workforce by half at both the New York and Birmingham offices along with reducing cash compensation for the executive management team and board. Restructuring costs will be cash expense of $0.3 million and incurred in the third quarter of 2022.
The GBM program was cut because it failed to receive investor credit and was also going to be more expensive than the AML program. The trial size that would have been necessary to convince investors and the FDA that INB-400 could generate pivotal data would have required a larger capital raise than is now feasible. The program has been paused, but management is optimistic that with the strong results either a partner will be found or investor interest resumes. With these changes, IN8bio will now be solely focused on the INB-100 program which provided its most recent update in mid-August.
Private Placement
On October 1st, IN8bio announced pricing for a private placement of $12.4 million, before fees and expenses. Capital providers for the deal include existing healthcare-focused institutional investors, a large mutual fund and other existing and new institutional investors. Net proceeds are expected to fund company operations into 2026.
Under the terms of the agreement, IN8bio will sell 25,759,595 shares of common stock and 5,646,853 pre-funded warrants as a unit combined with a warrant at a purchase price of $0.395 ($0.3949 for the pre-funded warrants). Each of the 31.4 million shares or prefunded warrants will have a warrant attached with an exercise price of $0.27 and a three-year duration. Along with the private placement, the terms of the series A common stock purchase warrants issued in conjunction with the December 2023 capital raise were modified. The exercise price moves from $1.25 to $0.45 and the expiration moves from June 2025 to October 2025.
The capital will support the further clinical development of INB-100 and the continued enrollment of patients in the expansion cohort. Total expected enrollment has been expanded to 25 patients at the anticipated Phase II dose. Enrollment is expected to extend until 1H:25 with long term follow up results anticipated in late 2025 and in 2026.
IN8bio will expand the trial to enroll another 25 patients at the recommended Phase II dose which is a single dose of 3 x 106 γδ T cells/kg. An additional ten patients will be monitored in parallel with the trial to establish a control. This arm will prospectively assess leukemia patients and enable comparison between patients receiving INB-100 to those who only receive standard haplotransplantation. Enrollment of the expansion population is expected to be complete in 1H:25 and further updates from the trial are expected in 2025 and 2026.
Valuation
We update our valuation to reflect the termination of the GBM program and the reduction in spend over INB-100’s development period. New cost estimates are about half previous levels as shown in the full report. We also modify the shares and warrants outstanding to reflect the new claims on equity. We continue to see a biologic license application (BLA) submission in 2029 and first sales of INB-100 in 2030 in the United States. Ex-US developed world regulatory submissions are expected to begin in 2030 with first international sales in 2031. The result of our adjustments generates a valuation of $1.50 per share.
Milestones
➢ Future goals outlined for IN8bio – January 2024
➢ Present additional preclinical data for INB-300 (nsCAR) at AACR (poster) – April 2024
➢ Dosing of first patient in INB-400 trial – April 2024
➢ Oral presentation at American Society of Gene & Cellular Therapy (ASGCT) – May 2024
➢ Two poster presentations at International Society for Cell & Gene Therapy (ISCT) – May 2024
➢ ASCO INB-200 presentation – June 2024
➢ EHA presentation: INB-100 & -200 (important data expected) – June 2024
➢ Attend HC Wainwright Immune Cell Engager Conference – June 2024
➢ IND filing for allogeneic arms of INB-400 – 2025
➢ August 1st, 2024 patient survival update for INB-100 & INB-200 – August 2024
➢ Restructuring and narrowing of focus to INB-100 AML program – September 2024
➢ $12.4 million capital raise – October 2024
➢ Topline announcement for INB-100 expansion cohort – 2025
➢ Submission of IND Phase II in AML – 1H:25
Summary
IN8bio had to make some tough decisions on its programs given the difficult funding environment and lack of value recognition for its GBM program. We expect to see costs cut by more than half and all resources directed towards the INB-100 program, which has shown impressive results. This restructuring was followed by a capital raise that will support an expansion of the Phase I trial from ten subjects to 25 and the addition of ten AML patients who will serve as a control. Successful results in this endeavor could support a much stronger capital raise in 2026 that will allow a proof-of-concept trial to be run. With successful Phase II results, INB-100 could receive expedited treatment by the FDA. The change in the pipeline, reduction in expenses and addition of new claims on equity require us to update our valuation which is now $1.50 per share and represents a return of over 5x. We believe that INB-100 is a safe and effective treatment but do recognize that the small number of patients that have responded so far may be insufficient to support moving into Phase II trials. We adjust our valuation to $1.50 per share.
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